Where next in Private Equity? Pt 1 with Paul Wood (Grant Thornton)
Moon Executive Search are a full-service Executive Search firm with offices in London and Bristol.
We bring twenty years plus experience of advising and working with Private Equity and Venture backed businesses.
We have covered multiple sectors from retail, manufacturing, branded goods, e-commerce, to Fintech, MedTech and EdTech and we have successfully built multiple boards including bringing in a new Chair, Non-Exec, CEO, CFO and CTO for a new business.
The economic shock brought on by the Covid-19 crisis raises many unknowns about how the sudden demand shock will affect future business activity.
We asked our Private Equity connections and Professional Advisors to give us their sense of the immediate impact of Covid-19 on future deal flow, considering different market sectors, potential access to finance, and what lasting affects Covid-19 could have on future trends and markets.
‘In a matter of weeks, we have seen the acceleration of strategies planned for the next 3-5 years and investors will be looking for those businesses that have adapted to the new way of operating and have scalable platforms, which technology will play an increasing part of.’
As a result, we have four great contributions from the worlds of Banking, Accounting, Investing and the Legal sector who will all take us through their thoughts for the post covid-19 world and beyond and we will show case these in four separate pieces. Our contributors are:
Paul Wood, Director Corporate Finance advisory Grant Thornton
Andrew Webber, Partner and Head of Corporate at national commercial law firm TLT
Ned Dorbin, Head of South West and Investor at BGF
Richard Taylor, Regional Director South West and South Wales Corporate and Commercial Banking Santander
We asked all four:
‘‘Do you think that there could be any underlying messages in this ever-changing World and what are the key lessons coming out of this current Pandemic’?
In this first article we asked Paul Wood, Director Corporate Finance Grant Thornton who responded:
“Firstly, the immediate impact of covid-19 has been to push many existing sale processes to the right with buyers unable to undertake their diligence, build relationships with management teams or get comfortable with the profit level upon which a deal can be agreed. Some businesses have performed strongly in the past few months (is this a bubble?) or poorly (will they ever recover to pre pandemic levels?). That said transactions, even if at greatly reduced numbers, are still completing in sectors less affected such as tech, healthcare and specialist manufacturing, largely but not exclusively in the B2B rather than consumer space. We currently expect deal flow to increase towards the end of the summer months as we move into Autumn with completions ticking up in the last quarter.
We expect to see a change to how we work, with less travel, more home working and businesses adopting new business models
One of the implications of the past few months could also be a change to the mix and type of transactions and we are seeing private equity increasingly sharing details of their portfolio clients looking for bolt-on acquisitions, which may be more of a focus for a period. Despite unprecedented levels of government support, there will be businesses who were over-borrowed or sub-scale going into lockdown who will need to find a solution, be it fresh equity or sale.
In terms of access to finance, we suspect transaction related debt funding will be either offered at lower quantum or more expensive as funders manage the risks prevalent in their own portfolios and seek a larger degree of headroom if things don’t go to plan. That said, there is still a ‘wall of money’ looking for a home where interests rates are near zero and post lockdown this will be targeted at a smaller pool of quality assets.
In the medium term, we expect to see a change to how we work, with less travel, more home working and businesses adopting new business models, reviewing their property portfolios, improving their on-line delivery and having even more robust contingency plans. In a matter of weeks, we have seen the acceleration of strategies planned for the next 3-5 years and investors will be looking for those businesses that have adapted to the new way of operating and have scalable platforms, which technology will play an increasing part of.
Having said all of this, we are a social species and I suspect we’ll still crave for the consumer markets that have been decimated by covid-19 to return and provide opportunities for investors and entrepreneurs (and the general public), we may just have to wait a little while longer for some of this.”
This week, we have great contributors from the World of Banking, Accounting, Investing and the Legal sector, who will take us through their thoughts for the post Covid-19 World and beyond.
Look out for our next article showcasing Andrew Webber, Partner and Head of Corporate at national commercial law firm TLT.